Comptroller Glenn Hegar sat down with Ross Ramsey of The Texas Tribune April 7, 2020, to talk about the state of the Texas economy and its possible impact on the state budget. During the interview Hegar was not shy about using the term “recession” in describing the state’s economy and noted that the pandemic and oil price wars are the obvious cause.
He reported that, before the oil wars, sales tax receipts for oil were already down from this time last year. Other sales tax revenue sources have also taken a hit, and the hotel tax has seen a 67.5 percent dip. Hegar’s office is looking back at past recessions to help guide efforts, but he says the pandemic will have a drag effect for some time depending on its duration.
The comptroller said that calls he is receiving from legislators are generally focused on budget projections for the remainder of this budget cycle and the cycle to be considered when the Legislature convenes in 2021. He noted that it is too early to give specific numbers, as more data is needed and that will take time. The current budget cycle is still in flux, so trying to forecast the next budget cycle is not possible at this time. Revenue estimates this summer will provide better data and anything at this juncture is just “back of the envelope” numbers. He said he does believe that there will be a lowering adjustment of several billion dollars.
Hegar said he does not believe there is a need for a special legislative session and pointed to the state’s Economic Stabilization Fund (ESF), which he estimates will contain approximately $8.5 billion, down from earlier estimates of $9.3 billion.
He noted that the state has some cashflow management tools that can be used without a special session and the ESF is one of those tools. Other tools include federal funding to states, the ability to move money around in the treasury, and agencies reducing their spending where possible. Hegar is already taking steps aimed at cost savings within his own agency, including a hiring freeze and no salary increases.